July wheat was 1 3/4 cents higher overnight. The dollar index was lower overnight.

The July wheat contract failed to make a new contract low yesterday, but just barely, as outside markets turned neutral to positive. However, one analyst noted that the hard red winter wheat harvest may be turning into a fresh negative price influence in wheat. That harvest is set to move into Kansas this week, and cash traders are reporting that storage space is rapidly filling up to the south. Sources report that elevators are already filling up in Oklahoma and that Corpus Christi is full.

One analyst noted that storage is usually able to clear itself during harvest as wheat is rapidly loaded for export. However, this year’s export pace is down due to ample world supplies, a strong dollar and increased penetration of traditional US markets by Russia. Wet weather is forecast this weekend in some harvest areas, but the analyst noted that this is not likely to ease the storage crunch. As a result, basis levels for hard red winter wheat have dropped sharply in some areas this week and KC wheat futures lost to Chicago yesterday and again overnight.

Rain is creating a very different scenario for soft red wheat. Coverage by yesterday’s and today’s rain systems is expected to be widespread in the central soft red wheat belt with moderate to heavy totals across the northern belt. Lesser amounts are expected to the east and south. This rain is unwelcome for soft red wheat since the area already has adequate to surplus soil moisture with harvest just around the corner.

Sources in Canada report that wet conditions there could force the suspension of planting in a number of areas soon due to persistent wet weather interruptions to the planting progress. In India, the arrival of monsoon rains has been late after all, despite early and frequent predictions by the government that rains would be normal and arrive on time. In fact, the monsoon did arrive 1 day early, but further progress was delayed by a cyclone. That has since weakened and the monsoon has now moved into India’s southern and western regions.

Traders and analysts are expecting the USDA to slightly lower its estimate of US winter wheat production on Thursday in comparison to the May estimate of 1.458 billion bushels. Ending stocks are also expected to be lowered slightly from the May 2009/10 estimate of 950 million bushels. The 2010/11 ending stocks number is also expected to be lowered slightly from the May total of 997 million bushels.
Bron:cme